Bill Morneau isn’t wrong about the Liberal government’s failure to deliver on a long-term economic growth plan. It’s just odd that he talks about it as if it’s someone else’s fault. An awful lot of what he has criticized happened on his watch.
Mr. Morneau – finance minister for Justin Trudeau’s government for its first five years in office – made front-page headlines last week when he gave a speech taking his former boss and colleagues to task, for failing to deal with Canada’s chronic productivity and competitiveness problems in their economic strategy.
He criticized the government for short-term, politically-motivated thinking at the expense of a long-term growth plan. He called out his former mates for lacking a firm fiscal anchor to bind the government to spending and deficit targets.
But these are not issues that have only emerged since Mr. Morneau resigned in August of 2020. The government came to office in 2015 on an economic platform very much focused on building long-term productivity and growth – but then repeatedly stumbled, stalled and backpedalled its way out of its own best advice. When you look at where the government drifted off course, Mr. Morneau was, at least nominally, at the rudder.
The centrepiece of the Liberal platform in 2015 – a massive, long-term spending commitment to build infrastructure – has lacked a coherent focus and been bogged down in bureaucratic delays and intergovernmental squabbling. Year after year, billions of dollars of promised investment have gone unspent. The Canada Infrastructure Bank, established under Mr. Morneau’s leadership, which was supposed to be the engine propelling a national infrastructure renaissance, has been comically slow to get anything done at all.
The Advisory Council on Economic Growth – handpicked by Mr. Morneau in 2016 to lay the groundwork for a long-term growth strategy – presented the government with a useful blueprint nearly five years ago. On many of the council’s key recommendations, the government has made little or no progress, most notably in critical areas such as regulatory and tax reforms that would ignite chronically sluggish private-sector investment.
In 2017, when Mr. Morneau tried to enact small-business tax changes aimed at removing loopholes that inadvertently discouraged productivity-enhancing investment and growth, he bungled the message badly, leaving the impression that he was calling out small entrepreneurs as tax avoiders. The uproar was so loud that the government backpedalled hard, watering down its plan and cutting the small-business tax rate.
And when the government abandoned its promise to run small, temporary deficits and return to a balanced budget within its first mandate, instead trying to sell the Canadian public on the virtues of a looser fiscal anchor of slowly whittling away at the debt-to-GDP ratio, Mr. Morneau enthusiastically led the sales pitch.
Not that Mr. Morneau denied responsibility for any of this in his speech, but he certainly didn’t embrace it. He portrayed himself as a team player in a government that opted to pull in a different direction – a guy whose good policy intentions were blocked by a Prime Minister and cabinet that had other priorities, including plain old-fashioned political expediency.
That may be. Anyone with a decent sense of how things have been run in Ottawa over the past seven years wouldn’t be shocked to hear that a finance minister was no match for the Prime Minister’s Office in any battle of wills over the focus of economic and fiscal policy.
Or, maybe, Mr. Morneau is wrestling with responsibility for things that seemed within his grasp when he first took the job but that, ultimately, he fumbled. At times, his speech seemed to verge on a mea culpa, but it never quite got there.
If so, it certainly wasn’t the worst offence a finance minister every committed. The governments that preceded this one didn’t do any better at expanding the economy’s long-term growth potential, at generating meaningful and sustained productivity investments, at addressing the country’s competitive weaknesses. We’ve been taking the easy way out long before Bill Morneau came along. He’s just the guy who oversaw this file for a government that promised it would do more – and then didn’t.
Whether he was a lone voice overwhelmed by the powers within his own party, or complicit in an economic strategy that habitually found excuses to keep the country’s most fundamental economic problems on the backburner, it doesn’t much matter. He didn’t get the job done – a job that he himself is now publicly urging the government to get off the political hamster wheel and get serious about.
And today’s Liberal government – minus Mr. Morneau – is again talking about those long-term economic priorities. In the spring budget, Deputy Prime Minister/Finance Minister Chrystia Freeland declared tackling the productivity growth problem as a major priority, calling it “the Achilles’ heel of the Canadian economy.”
We don’t know if Ms. Freeland has any more power, ability or will to make it happen than Mr. Morneau did. But we do know that we’re seven years further down the road than we were when Mr. Morneau set out to tackle those problems, with little to show for it.
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